FOS overrules Tesco’s offer of ‘very little help’ to cryptocurrency scam victim

Tesco looked into Ms H’s case and said that she was not entitled to any refund of the payments she made using her Tesco credit card (totaling over £3000). She had not directly paid the scammer (‘A’), but had purchased cryptocurrency from (‘X’), a legitimate ‘crypto dealer’. The payments were authorised by Ms H, and it was Tesco’s duty to process the payments. As a result, Tesco took the view that Ms H was responsible for the losses and offered no further support. She turned to the Financial Ombudsman (FOS) for help.

FOS is a Government backed independent body set up to resolve disputes between customers and their banks. They make decisions based on what would be considered ‘fair and reasonable’ in each circumstance.

In response to the complaint, Tesco argued that Ms H had dealt with the company, (‘X’), previously in other crypto transactions and was happy with the payments she wanted to make. Tesco also added that (‘X’) was a genuine company and there was no suggestion that (‘X’) or (‘A’) had been involved in scams before.

Following an investigation, the Ombudsman concluded that Tesco was, in fact, liable for Ms H’s losses. Just because a firm was not on City watchdog, the Financial Conduct Authority’s warned list did not mean they weren’t involved in a scam. When Ms H’s money was lost in late 2019, Tesco would have known that cryptocurrency scams were on the rise, with fraudsters using cold calling tactics and placing adverts on social media to lure people in, as happened in Ms H’s case.

FOS also highlighted that Tesco had a duty to monitor customer accounts and had systems in place to ‘red flag’ any unusual transactions. They should have helped protect their customers’ money by looking out for risks to vulnerable customers, unusually large or frequent transactions, or payments to or from new accounts.

Banks have the power to block or delay payments if they need to carry out additional checks to help prevent money laundering and scams. Ms H’s first two payments to (‘X’) failed and Tesco declined the third as a high-risk transaction. A fourth payment did go through, but Tesco blocked Ms H’s credit card immediately afterward. Ms H had to call the bank and have the block removed, to make the payment.

The Ombudsman was provided with a recording of the conversation Ms H had with Tesco and concluded that the adviser failed to pick up on any warning signs that Ms H may have become the victim of fraud. Nor did they warn her about common cryptocurrency scams and the tactics involved.

The fact that she was cold-called initially and was now being assisted by a third party, who had access to her online account, was particularly worrying. The Ombudsman also said there was no reason why Ms H should necessarily have known about sophisticated cryptocurrency scams.

As a result of the Ombudsman’s investigation, Ms H was refunded all of the payments she made to (‘X’) using her Tesco credit card, plus interest and charges.

Authorised Push Payment (APP) Fraud happens when a customer authorises a payment to a third party in good faith, believing it to be for goods or services, only to find out later that the third party is a scammer. The money is quickly moved on to another account, making it very difficult to trace and recover.

Sarah Spruce, head of TLW Solicitors’ Push Payment Fraud Claims team said:

“Ms H’s case is another example where a sending bank is responsible for payments it processes on behalf of a customer. If you have been the victim of a cryptocurrency scam, don’t feel embarrassed. Get in touch and see if there is a possibility to make a complaint to the Financial Ombudsman Service and claim compensation.”